
U.S. stocks inch higher despite credit rating downgrade
NEW YORK, May 19 (Xinhua) -- U.S. stocks were little changed on Monday, as markets reacted to mounting concerns over the country's fiscal outlook following a credit rating downgrade and the advancement of a controversial tax-and-spending bill.
The Dow Jones Industrial Average rose 137.33 points, or 0.32 percent, to 42,792.07. The S&P 500 added 5.22 points, or 0.09 percent, to 5,963.6. The Nasdaq Composite Index increased 4.36 points, or 0.02 percent, to 19,215.46.
Seven of the 11 primary S&P 500 sectors ended in green, with health and consumer staples leading the gainers by adding 0.96 percent and 0.42 percent, respectively. Meanwhile, energy and consumer discretionary led the laggards by losing 1.55 percent and 0.27 percent, respectively.
Late Friday, Moody's Ratings downgraded the U.S. credit rating, stripping its last triple-A credit rating, citing persistent fiscal deficits and rising interest costs as key factors. Those concerns intensified after the House Budget Committee approved U.S. President Donald Trump's tax-and-spending bill late Sunday. Moody's cited "persistent, large fiscal deficits" for its downgrade.
"We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration," the agency wrote, referring to the tax and spending bill making its way through Congress. U.S. financial health is likely to deteriorate as the government's debt and interest burden increase.
Experts seem not to worry about the long-term sustainability of U.S. finances. "There are no signs of any serious deficit restraint at this stage," noted Jim Reid, a strategist at Deutsche Bank.
"The Moody's downgrade of U.S. debt doesn't tell investors anything they don't already know about the U.S.'s fiscal woes," wrote Bank of America analysts in a note on Monday.
However, the downgrade and fiscal developments contributed to volatility in the bond market. The 10-year Treasury yield briefly climbed to 4.56 percent, its highest level in over a month, before pulling back to 4.45 percent as of 4:10 p.m. Eastern Daylight Time.
Trump added to the tensions over the weekend by criticizing Walmart for signaling price increases tied to tariffs. Walmart slumped 0.12 percent on Monday.
The Federal Reserve, which has held interest rates steady this year, remains cautious due to the uncertainty surrounding tariffs and fiscal policy. New York Fed President John Williams noted Monday that the economic outlook remains murky and that monetary policy direction may not become clearer for months.
Tech stocks, which have driven much of the recent market rally, traded mixed on Monday. Tesla dropped 2.25 percent after a 17 percent gain last week, while Apple lost about 1.17 percent. Nvidia also slipped, while Alphabet, Microsoft, Amazon, Meta and Broadcom posted some gains.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Sun
38 minutes ago
- The Sun
China's May exports slow, deflation deepens as tariffs biteS
BEIJING: China's export growth slowed to a three-month low in May as U.S. tariffs slammed shipments, while factory-gate deflation deepened to its worst level in two years, heaping pressure on the world's second-largest economy on both the domestic and external fronts. U.S. President Donald Trump's global trade war and the swings in Sino-U.S. trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller coaster ride and hobbled world growth. Underscoring the U.S. tariff impact on shipments, customs data showed that China's exports to the U.S. plunged 34.5% year-on-year in May in value terms, the sharpest drop since February 2020, when the outbreak of the COVID-19 pandemic upended global trade. Total exports from the Asian economic giant expanded 4.8% year-on-year in value terms in May, slowing from the 8.1% jump in April and missing the 5.0% growth expected in a Reuters poll, customs data showed on Monday, despite a lowering of U.S. tariffs on Chinese goods which had taken effect in early April. Imports dropped 3.4% year-on-year, deepening sharply from the 0.2% decline in April and worse than the 0.9% downturn expected in the Reuters poll. Exports had surged 12.4% year-on-year and 8.1% in March and April, respectively, as factories rushed shipments to the U.S. and other overseas manufacturers to avoid Trump's hefty levies on China and the rest of the world. While exporters in China found some respite in May as Beijing and Washington agreed to suspend most of their levies for 90 days, tensions between the world's two largest economies remain high and negotiations are underway over issues ranging from China's rare earths controls to Taiwan. Trade representatives from China and the U.S. are meeting in London on Monday to resume talks after a phone call between their top leaders on Thursday. 'Export growth was likely stalled by heavy customs inspections in May due to tightened export control efforts,' said Xu Tianchen, senior economist at the Economist Intelligence Unit, noting that rare earth exports nearly halved last month, while electric machinery exports also slowed significantly. China's imports from the U.S. also lost further ground, dropping 18.1% from a 13.8% slide in April. Zichun Huang, economist at Capital Economics, expects the slowdown in exports growth to 'partially reverse this month, as it reflects the drop in U.S. orders before the trade truce,' but cautions that shipments will be knocked again by year-end due to elevated tariff levels. China's May trade surplus came in at $103.22 billion, up from the $96.18 billion the previous month. Other data, also released on Monday, showed China's import of crude oil, coal, and iron ore dropped last month, underlining the fragility of domestic demand at a time of rising external headwinds. Beijing in May rolled out a series of monetary stimulus measures, including cuts to benchmark lending rates and a 500 billion yuan low-cost loan program for supporting elderly care and services consumption. The measures are aimed at cushioning the trade war's blow to an economy that relied on exports in its recovery from the pandemic shocks and a protracted property market slump. China's markets showed muted reaction to the data. The blue-chip CSI300 Index and the benchmark Shanghai Composite Index were up around 0.2%. Deflationary pressures Producer and consumer price data, released by the National Bureau of Statistics on the same day, showed that deflationary pressures worsened last month. The producer price index fell 3.3% in May from a year earlier, after a 2.7% decline in April and marked the deepest contraction in 22 months, while consumer prices extended declines, having dipped 0.1% last month from a year earlier. Cooling factory activity also highlights the impact of U.S. tariffs on the world's largest manufacturing hub, dampening faster services growth as suspense lingers over the outcome of U.S.-China trade talks. Sluggish domestic demand and weak prices have weighed on China's economy, which has struggled to mount a robust post-pandemic recovery and has relied on exports to underpin growth. Retail sales growth slowed last month as spending continued to lag amid job insecurity and stagnant new home prices. U.S. coffee chain Starbucks said on Monday it would lower prices of some iced drinks by an average of 5 yuan in China. The core inflation measure, excluding volatile food and fuel prices, registered a 0.6% year-on-year rise, slightly faster than a 0.5% increase in April. However, Capital Economics Huang said the improvement in core prices looks 'fragile', adding 'we still think persistent overcapacity will keep China in deflation both this year and next.'


The Sun
38 minutes ago
- The Sun
China's Exports to U.S. Plunge 34.5% Amid Tariffs
BEIJING: China's export growth slowed to a three-month low in May as U.S. tariffs slammed shipments, while factory-gate deflation deepened to its worst level in two years, heaping pressure on the world's second-largest economy on both the domestic and external fronts. U.S. President Donald Trump's global trade war and the swings in Sino-U.S. trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller coaster ride and hobbled world growth. Underscoring the U.S. tariff impact on shipments, customs data showed that China's exports to the U.S. plunged 34.5% year-on-year in May in value terms, the sharpest drop since February 2020, when the outbreak of the COVID-19 pandemic upended global trade. Total exports from the Asian economic giant expanded 4.8% year-on-year in value terms in May, slowing from the 8.1% jump in April and missing the 5.0% growth expected in a Reuters poll, customs data showed on Monday, despite a lowering of U.S. tariffs on Chinese goods which had taken effect in early April. Imports dropped 3.4% year-on-year, deepening sharply from the 0.2% decline in April and worse than the 0.9% downturn expected in the Reuters poll. Exports had surged 12.4% year-on-year and 8.1% in March and April, respectively, as factories rushed shipments to the U.S. and other overseas manufacturers to avoid Trump's hefty levies on China and the rest of the world. While exporters in China found some respite in May as Beijing and Washington agreed to suspend most of their levies for 90 days, tensions between the world's two largest economies remain high and negotiations are underway over issues ranging from China's rare earths controls to Taiwan. Trade representatives from China and the U.S. are meeting in London on Monday to resume talks after a phone call between their top leaders on Thursday. 'Export growth was likely stalled by heavy customs inspections in May due to tightened export control efforts,' said Xu Tianchen, senior economist at the Economist Intelligence Unit, noting that rare earth exports nearly halved last month, while electric machinery exports also slowed significantly. China's imports from the U.S. also lost further ground, dropping 18.1% from a 13.8% slide in April. Zichun Huang, economist at Capital Economics, expects the slowdown in exports growth to 'partially reverse this month, as it reflects the drop in U.S. orders before the trade truce,' but cautions that shipments will be knocked again by year-end due to elevated tariff levels. China's May trade surplus came in at $103.22 billion, up from the $96.18 billion the previous month. Other data, also released on Monday, showed China's import of crude oil, coal, and iron ore dropped last month, underlining the fragility of domestic demand at a time of rising external headwinds. Beijing in May rolled out a series of monetary stimulus measures, including cuts to benchmark lending rates and a 500 billion yuan low-cost loan program for supporting elderly care and services consumption. The measures are aimed at cushioning the trade war's blow to an economy that relied on exports in its recovery from the pandemic shocks and a protracted property market slump. China's markets showed muted reaction to the data. The blue-chip CSI300 Index and the benchmark Shanghai Composite Index were up around 0.2%. Deflationary pressures Producer and consumer price data, released by the National Bureau of Statistics on the same day, showed that deflationary pressures worsened last month. The producer price index fell 3.3% in May from a year earlier, after a 2.7% decline in April and marked the deepest contraction in 22 months, while consumer prices extended declines, having dipped 0.1% last month from a year earlier. Cooling factory activity also highlights the impact of U.S. tariffs on the world's largest manufacturing hub, dampening faster services growth as suspense lingers over the outcome of U.S.-China trade talks. Sluggish domestic demand and weak prices have weighed on China's economy, which has struggled to mount a robust post-pandemic recovery and has relied on exports to underpin growth. Retail sales growth slowed last month as spending continued to lag amid job insecurity and stagnant new home prices. U.S. coffee chain Starbucks said on Monday it would lower prices of some iced drinks by an average of 5 yuan in China. The core inflation measure, excluding volatile food and fuel prices, registered a 0.6% year-on-year rise, slightly faster than a 0.5% increase in April. However, Capital Economics Huang said the improvement in core prices looks 'fragile', adding 'we still think persistent overcapacity will keep China in deflation both this year and next.'


Free Malaysia Today
an hour ago
- Free Malaysia Today
Asian markets rally ahead of latest China-US trade talks
The Hong Kong stock market rose more than 1%. (AP pic) HONG KONG : Stocks rallied today on hopes that a fresh round of China-US trade talks later in the day will ease tensions between the economic superpowers, while investors were also cheered by forecast-topping US jobs data. The gains extended a run-up across global markets in recent weeks as fears about Donald Trump's tariff blitz subsided and countries made deals with Washington. All eyes are on London, where top officials from China and the US are due to meet for more negotiations aimed at preserving a fragile truce agreed last month that slashed eye-watering tit-for-tat levies. The talks come days after Trump and Chinese counterpart Xi Jinping held their first publicly announced telephone talks since the US president returned to the White House. They were helped by news that Beijing had on Saturday approved some applications for rare-earth exports, while plane giant Boeing will start sending commercial jets to China for the first time since April. Optimism that the two sides will make a breakthrough boosted Asian markets, with Hong Kong up more than 1%, while Tokyo, Shanghai, Seoul, Singapore, Taipei and Manila also advanced. The gains followed a strong lead from Wall Street, where all three main indexes closed more than 1% higher after figures showing the world's largest economy created a forecast-beating 139,000 jobs last month. While the figures for the previous two months were revised down, the data indicated that the economy remained robust, and tempered worries sparked by Wednesday's report by payroll firm ADP showing a big miss on private hiring. Eyes will now turn to the Federal Reserve (Fed) as it decides whether to lower interest rates, with many economists warning that Trump's tariffs could reignite inflation, hit supply chains and drag on consumer sentiment. 'The May minutes and recent comments by several (policy board) members… suggest the Fed is highly attentive to the risk that tariffs will lead to a persistent inflation shock,' wrote analysts at Bank of America. 'Those risks could come into focus for markets by the fall,' analysts said. Michael Hewson at MCH Market Insights remained positive for the outlook for the US economy. 'For now, the US economy continues to look reasonably resilient although the recent ADP jobs report showed some evidence of a slowdown in May,' he said in a commentary. 'However on the whole there is little sign that the economy is on the cusp of an economic shock at the moment, despite the unpredictable nature of the current US administration,.' Hewson added.